Feldman v Harari
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Feldman v Harari 2019 NY Slip Op 33853(U) December 6, 2019 Supreme Court, Queens County Docket Number: 704671/19 Judge: Leonard Livote Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] QUEENS COUNTY CLERK 12/19/2019 11:02 AM NYSCEF DOC. NO. 73 INDEX NO. 704671/2019 RECEIVED NYSCEF: 12/19/2019 Short Form Order NEW YORK SUPREME COURT - QUEENS COUNTY IA Part 33 Present: HONORABLE LEONARD LIVOTE Acting Supreme Court Justice x Index Number 704671 I 19 Application of Alon Feldman, for the judicial dissolution of Harari Realty Corp., a New York Corporation pursuant to Section 1104-A of the Business Corporati on Law Motion Date 8/13/19 - vs - Motion Seq. No. 1 Yair Harari, the other holder of shares representing fifty one percent of the votes of all outstanding shares of Harari Realty Corp. Entitled to vote in an electi on of directors Respondents FILED DEC 1 9 2019 x COUNTY CLERK QUEENS COUNTY The fo llowing papers EF numbered below read on this motion by respondent Yair Harari for, inter alia, an order pursuant to CPLR 32 1 l (a)(4) dismissing the petition for the judicial dissoluti on of Harari Realty Corp. Papers Numbered Notice of Motion - Affidavits - Exh ibits ...... .... ................................... 9-36 Answering Affidavits - Exh ibits .......................................................... 38-64 Reply Affidavits ... ... ...... ...... .................................. ... ................... ...... ... 65-72 Upon the foregoing papers it is ordered that the mot ion is den ied without prejudice to renewal. I. Background Petitioner Alon Feldman (Alon Feldman or Feldman) owns 98 shares of common stock in Harari Realty Corp, (the subj ect corporation), which amounts to a 49% ownership interest, and respondent Yair Harari (Harari) owns 102 shares of common stock, which amounts to a 51 % ownership interest in the company. Harari Realty Corp. owns rea l property known as 4 17 l 51h Street, Brooklyn, New York wh ich has been improved by an apartment building. 1 of 5 [*FILED: 2] QUEENS COUNTY CLERK 12/19/2019 11:02 AM NYSCEF DOC. NO. 73 INDEX NO. 704671/2019 RECEIVED NYSCEF: 12/19/2019 On or about January 4, 2013 , Asaf Feldman (a non-party to the instant special proceeding) bega n an action in the New York State Supreme Court, County of Kings against I larari Realty Corp. and Yair Harari (Feldman v. Harari Realty Corp, Kings County Index No. 500055/ 13). The complaint asserted five causes of action, the fir t, for the imposition of a constructi ve trust, the second for an accounting of the gross rents and profits generated by the property and a judgment for sums found to be due, the third, for a judgment against the defendants, the fourth for a permanent injunction against the defendants prohibiting, inter alia, the sale of the property, and the fifth, for a judgment against the defendants. The Kings County action concerned a joint venture or partnership agreement relating to the subject corporation between Asaf Feldman and Yair I Iarari. The complaint alleged that notwithstanding their fiduciary relationship as joint venturers, the corporation and Harari refinanced the property owned by the corporation fo r $ 1,700,000 without Asa fFeldman 's consent, and he did not receive any of the cash proceeds from the refinancing. Moreover, the defendants allegedly refu sed to account to Asa f Feldman for his share of the rents and profits, and the defendants allegedly did not pay Asaf Feldman his 50% share of the rents and profits. The defendants allegedly had also wrongfully began an eviction proceeding against Asaf Feldman who alleged ly had a ri ght to occupy an apartment in the building owned by the subject corporation. On or about April 23, 2015 , Asa f Feldman and Yair Harari entered into a stipulation of settlement, and they contemporaneously entered into an amended shareholder agreement. Pursuant to th e agreement, in or about November , 20 15, the former transferred his shares to petitioner Alon Feldman, who now has a 49% interest in the subj ect corporation . In 2017, Alon Feldman began an action in the New York State Supreme Court, County of Kings agai nst Yair Harari and Harari Realty Corp. (Feldman v. Harari, Kings County Index No. 512023/1 7). The defendants moved to dismiss the lawsuit, and by a decision and order dated September 5, 2017, the Honorable Leon Ruchelsman granted the motion. The court stated: " This lawsuit was commenced wherein it is alleged that the defendants breached their fiduciary duty and committed fraud and consequently the plaintiff seeks dissolution of the corporation . *** The primary basis upon which the moti on to dismiss is based is the settlement agreement. The settlement agreement states that ' the court wi ll ask [sic] to retain jurisdiction over the action for the sole purpose of enforc ing th e parties settlement agreement. '*** Thus, without examining any of the substantive issues, plain ti ff has failed to present any evidence why a new action was commenced . Therefore, this is an improper forum upon which to explore these issues.'' In effect, Judge Ruschelman dismissed the action before him, which included a cause of action for the dissolution of the subj ect corporation, on the ground that the 2013 action was another action pending. 2 2 of 5 [*FILED: 3] QUEENS COUNTY CLERK 12/19/2019 11:02 AM NYSCEF DOC. NO. 73 INDEX NO. 704671/2019 RECEIVED NYSCEF: 12/19/2019 On or about July 23, 20 18, Alon Feldman began another action in the New York State Supreme Court, County of Kings aga inst Yair Harari, individually and deri vati vely (Feldman v. Harari, Kings County Index No. 524995/20 18). According to the complaint's preliminary statement: " This action revolves around Yair Harari in conjuction with defend ants Edwi n Torres and Liberty Management mis-managing the assets and income of I larari Realty Corp, in among other ways attempting to create illegal units and illegal constructi on practices." Feldman alleged that, inter alia, ( I) the defendants had constructed an illegal apartment in th e basement of the building, ca usi ng dangerous conditions to develop and violati ons to accrue, (2) Harari fa iled to repair or replace parts of the front facade that were in a dangerous condition, (3) Harari had used assets of the corporati on to pay for his personal attorney, and (4) Harari had taken out mortgages in the past without shareholder consent and was threatening to aga in do so in the future. In addit ion to causes of action seeking damages, the compl ai nt's sixth cause of acti on sought the dissolution of th e corporati on pursuant to secti on 702 of the LLC Law [sic). However, the defendants moved to dismiss the action, and by a decision and order dated December l 0, 20 18, the Honorable Leon Ruschelman dismissed the complaint. While Feldman argued that the 20 18 action did not ''specifica lly concern the settlement agreement,.. Harari argued that the 20 18 action was "essentia lly the identical lawsuit (the 20 17 acti onl the court has already determined could rsic: should] not have been commenced." Judge Ruschelman agreed with Harari. In effect, he aga in determined that Feldman coul d not bring an action for the dissolution of the subject corporati on because th e 20 13 acti on was a prior acti on pending. On March 18, 20 19, petitioner Alon Feldman began the instant special proceeding for the dissolution of Harari Realty Corp. pursuant to Business Corporation Law §§ 1104-a. and I I I I .The amended veri fied petit ion alleges that, inter alia. ( I) there is a deadl ock between Feldman and Harari , (2) Harari is diverting assets of the corporati on, (3) Harari and the corporation constructed an illegal apartment in the basement of the su bject property whi ch created a dangerous condition and caused violati ons to accrue, (4) Harari has fa iled to disclose information to Feldman and has not permi tted him to examine corporate books and records, (5) Feldman has not been paid accord ing to the terms of the shareholders agreement, (6) Harari has fa iled to repl ace parts of the front facade whi ch is in a dangerous condition, and (7) Harari has threatened to encu mber the property wi th mortgages without Harari· s consent. In or about August, 20 19, after the instant special proceeding was begun, Asaf Feldman or Alon Feldman made a motion in the 2013 Brooklyn action. In an order dated August 7, 20 19, the Honorable Sylvia Ash determined:" Movant's application to add Alon Feldman individually and as a shareholder of Harari Realty Corp. to the caption is granted ... All other requests for relief by both parti es are deni ed." 3 3 of 5 [*FILED: 4] QUEENS COUNTY CLERK 12/19/2019 11:02 AM NYSCEF DOC. NO. 73 INDEX NO. 704671/2019 RECEIVED NYSCEF: 12/19/2019 The respondents submi tted the instant moti on on August 13, 20 19 I I. Discussion A. Another Action Pendin g A cow1 may dismiss an acti on pursuant to CPLR 32 1 l(a)(4) where ( 1) there is a ··substantial identi ty of the parties'' (Nakazawa v. Horow itz, 50 AD3d 985, 986, [2nd Dept. 2008] ; Montalvo v. Air Dock Systems, 37 AD3d 567[ 2nd Dept 2007]), (2) the two actions are "suffi ciently similar" (Aurora Loan Servs., LLC v. Reid, 132 AD3d 788, 788, [2nd Dept . 20 I 5) ;MontaLvo v. Air Dock Systems, supra; and (3) the relief sought is "the same or substantially the same." (Aurora Loan Servs., LLC v. Reid, supra, 788; Montalvo v. Air Dock Systems, supra.) ''The criti cal element is that both suits arise out of the same subject matter or series of alleged wrongs'· (Cherico, Cherico & Assoc. v. Midollo,67 AD3 d 622, 622, [2nd Dept 2009];[intemal quotation marks omitted]; Aurora Loan Servs., LLC v. Reid, supra.) The papers submitted by the parties on August 13, 20 19 do not permi t this court to make an info rmed determinati on about whether the 20 13 action is a prior pending action within the scope of CPLR 321 I (a)(4 ). The papers do not explain to the court why Alon Feldman was added as a party to the 20 13 Brooklyn action pursuant to the order dated August 7, 20 19, what allegati ons he has made or will make, and what relief he has sought or will seek. The papers do not in form the court, for example, whether Alon Feldman was added merely as the successor party in interest (see, CPLR I0 18) to the joint venture I partnership agreement or whether he was added for a different purpose, such as the assertion of a cause of action fo r the dissolution of the subject corporation. The paper do not in form the court about what occurred at the court conference scheduled for September 24. 20 19. Moreover, the respondents ra ised the August 7, 20 19 order of Judge Ash fo r the first time in reply papers. ·'The functi on of reply papers is to address arguments made in opposition to the position taken by the movant and not to perm it the movant to introduce new arguments in support of, or new grounds for the motion." (Dannasch v. Bifulco, 184 AD2d 41 5, 41 7, [ I st Dept.1 992]; HarLeysviLle Ins. Co. v. Rosario, 17 AD3d 677 [2 nd Dept 2005].)The August 7, 20 19 order of the Brooklyn court amounts to a new ground fo r making the instant moti on, and, consequently, the petiti oner did not have an opportuni ty to address Judge Ash' s order. Because of the recent developments in the 20 13 action. this branch of the motion will be deni ed without prejudice to renewal. 4 4 of 5 [*FILED: 5] QUEENS COUNTY CLERK 12/19/2019 11:02 AM NYSCEF DOC. NO. 73 INDEX NO. 704671/2019 RECEIVED NYSCEF: 12/19/2019 B. Res Judi cata and Collateral Estoppel Under the doctrine of res judicata, a di sposition on the merits bars litigation between the same parties, or those in pri vity with them, ofa cause of action ari sing out of the same transaction or series of transactions as a cause of action that either was raised or could have been ra ised in the prior proceeding***." ( Sterngass v. Soffer, 27 AD3d 549, 549-550 [2"d Dept 2006); Sandhu v. Mercy Med. Ctr., 54 AD3d 928 [ 2"d Dept. 2008).)_ Under the transactional approac h to the doctrine of res judicatata ,"once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a di fferent remedy." (O'Brien v. City of Syracuse, 54 NY2d 353, 357[ 198 1); Sandhu v. Mercy Med. Ctr., supra.) The determination of what "factual grouping" amounts to a "transaction" or "series of transactions" fo r res judicata purposes depends on such factors as the relation of the facts in time, space, and origin. (See, Smith v. Russell Sage College, 54 Y2d 185 [ 1981); Manko v. Gabay, 175 AD3d 484 [2"d Dept 20 19).) The causes of action re lating to the breach of the shareholder·s agreement, the subject of the 20 13 action, presented different parties. facts, issues, and demands for rel ief than those presented in the instant special proceeding for the dissolution of the subject corporation. This special proceeding is not barred by the doctrine of res j udicata. "The doctrine of collateral estoppel, a narrower species of res judicata, precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same***." ( Ryan v. New York Telephone Co., 62 NY2d 494, 500 [ 1984]; Parker v. Blauvelt Volunteer Fire Co., Inc., 93 NY2d 343 [ 1999]; Allegra Credit Co. v. Tin Chu, 29 AD3d 7 18 [29 AD3d 7 18 [2"d Dept., 2006].) The respondents argue that the pri or orders of Judge Ruschelman have a collateral estoppel e ffect on the issue of whether the instant act ion is barred because of another acti on pending. This court will not grapple with the collateral estoppel problem at the present time. but will wait until further in fo rmation is provided concerning the events transpiring in the 20 13 action. Indeed, the issue may have been mooted. This branch of the moti on will also be deni ed without prej udice to renewal. Dated : December 6, 201 9 A.Js.c. FILED DEC I 9 2019 5 5 of 5
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